Mumbai: The rupee plunged 9 paise to a record low of 90.87 against the US dollar in early trade on Tuesday, weighed down by sustained FII outflows and no breakthrough in the India-US trade deal. However, a weaker greenback and a decline in global crude oil prices capped further losses in the domestic unit, according to forex traders.
At the interbank foreign exchange, the rupee opened at its all-time low of 90.87 against the US dollar, down 9 paise from its previous close, and traded in a narrow range of 90.77- 90.87 in early trade. The rupee on Monday settled at a new all-time low of 90.78 against the US dollar, registering a loss of 29 paise over its previous close, weighed down by uncertainty over an India-US trade deal and persistent foreign fund outflows.
"The US-India trade deal still seems to be off by a distance with the Commerce Secretary saying the first phase will be signed before the end of the year and news that we are closest to the deal being signed. The uncertainty has clouded the recovery on the USD/INR pair as the rupee opened lower with dollar buying happening every day," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
Even a reduction in trade deficit on Monday could not bring about a recovery in the rupee with Foreign Institutional Investors (FII) outflows continuing, he added According to the latest government data released on Monday, India's trade deficit narrowed to a five-month low of USD 24.53 billion in November, as exports rebounded by 19.37 per cent to a six-month high of USD 38.13 billion after contracting in October, driven by higher shipments of engineering and electronics goods.
At the same time, the country's imports dipped by 1.88 per cent to USD 62.66 billion due to a fall in the inbound shipments of gold, crude oil, coal, and coke. FIIs sold equities worth Rs 1,468.32 crore on Monday, according to exchange data. Also, wholesale price inflation stayed in the negative for the second consecutive month in November at (-) 0.32 per cent, even though there was an uptick in prices of food articles like pulses and vegetables on a month-on-month basis, government data showed on Monday.
Wholesale Price Index (WPI)-based inflation was at (-) 1.21 per cent in October and 2.16 per cent in November last year. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 98.27. Brent crude, the global oil benchmark, was trading 0.61 per cent lower at USD 60.19 per barrel in futures trade. On the domestic equity market front, the 30-share benchmark index, Sensex, declined 363.92 points to 84,849.44 in early trade while the Nifty was down 106.65 points to 25,920.65.
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